A Seismic Shift in the Job Market: What You Need to Know about Freelancing and the Gig Economy

By Emil Bjerg, journalist and editor of The European Business Review

As gig work gradually becomes the new normal in young people’s work-life, this article covers the why, how, and where of the phenomenon. Read on to the end for extensive insight into the pros and cons of the most trending platforms for gig workers.

Gig work is on the rise. It can even be considered a megatrend, if not the megatrend, in the labour market. A 2022 survey from McKinsey estimates that 36 percent of the employed population in the US identifies as independent workers. In 2016, that number was 27 percent, so that’s a rise of nine percent in just six years. In other words, the gig economy in the US is growing three times faster than the total US workforce.

In the UK, the gig economy doubled in size between 2016 to 2019 – a staggering 4.7 million people in the British population became gig workers in those three years.

It’s especially young people that are driving the rise of the gig economy. In the US, 53 percent of young people between 18 and 34, have their gig jobs as their main source of income, according to a report from Edison Research.

Needless to say, that gig work is a trend worth being in the know about, whether you are a soon-to-be graduate, a CEO, or a recruiter. This article will examine the implications of the rise of gig work, and give a guide to the most popular platforms for gig workers within the knowledge economy.

A number of platforms make it possible to get away from the 9-5 lifestyle that many young people don’t identify with. The platforms can be divided into two main categories: 1) platforms for service workers and 2) platforms for knowledge workers.

Service gig workers work through platforms like Uber, Wolt, or Just Eat, whereas many knowledge gig workers use platforms such as Upwork, Fiverr, or Toptal. This article is concerned with freelancing platforms for knowledge workers. Knowledge workers sell a variety of services such as web development, SEO writing, graphic design, translations, market analysis, social media marketing, and much, much more. If there’s market demand, there’s a freelancer that can solve the problem.

The term “gig work” comes from the music industry where musicians are paid a fee to play a single show. Today, gig work is done in a range of industries having in common that clients are not committing to long, full-time salary contracts and that freelancers in return have the freedom to work with other clients and often have more freedom regarding where and when they work. Gig work contracts usually start off as short-term collaborations, but often turn into long-term collaborations.

The rise of gig work has been enforced by another megatrend in the job market – The Great Resignation. The Great Resignation, also known as the Big Quit, saw millions and millions of employees in Europe and – especially – in the US quit their jobs. According to a 2022 report from Price Waterhouse Cooper, people quit because they miss 1) purpose and 2) flexibility.

While it’s up to the individual to identify what is purposeful and meaningful, flexibility is more objective. Although many workers experienced the joy of remote work during the COVID crisis, many of those workers’ workplaces issued demands for workers to return to offices by the end of the pandemic. According to Price Waterhouse Cooper, that’s part of what drives people from the traditional 9-to-5 job to gig work.

The flexibility that freelance platforms offer means that gig workers can work when and where they want, giving birth to terms such as “digital nomads” and “tech nomads”. The highly mobile, highly skilled modern nomads are a cherished group of workers that countries around the world cater to through aggressive tax policies to make it attractive to relocate, even if temporarily.

In Italy, for instance, digital nomads that meet a number of requirements can live and work there and pay a flat tax rate of just five percent. Meeting some requirements, digital nomads in Greece can live and work with a 50 percent reduction in taxes. In Croatia, freelancers can even benefit from a total exemption of taxes.

Other countries around the world, such as Panama, Costa Rica, and Dubai also have policies to attract gig workers.

And it’s not just countries that are readjusting to the new normal of gig work. Zippia writes that from 2014 to 2018, the number of companies that operate fully on gig work increased by 554 percent. Today, over 30 percent of Fortune 500 companies report using gig workers.

However, it’s not all sunshine and rainbows when it comes to gig working. As is with most things in life, freelancing has its pitfalls. While some gig workers in the knowledge economy succeed in making six figures through freelancing platforms, others struggle to even get jobs. As Harvard Business Review writes, freelancing is precarious and often means that individuals have a lot at stake when it comes to income streams as well as identity. As a way to fight the precariousness, freelancers are generally preoccupied with being productive, Harvard Business Review writes.

If you’re still keen to hire or work through a platform, finding the right one is key. Without further ado, let’s have a look at the most popular platforms, their features, and their pros and cons. This article covers the following platforms:

• Upwork
• Fiverr
• Toptal

Upwork

Upwork is the biggest and most well-known platform for gig workers in the knowledge economy with more than 2.5 million companies using the platform to hire talent. Combined, freelancers make more than one billion USD through the platform each year. A key draw to Upwork is the scale and diversity of the workforce on the platform. That means that clients can use the platform to hire niche workers, as well as find cheap, qualified labour or the top expert within any given field.

Pros

• According to McKinsey, freelancers at Upwork are, on average, higher educated than freelancers on other platforms.
• All stages of contracting are managed by the platform – from signing a contract to storing money in escrow, to payments and even mediation in the case of disagreement between the two contracting parties.
• The best and most committed freelancers can earn badges to display successful collaborations with new clients. Within a month or two, freelancers with good reviews can earn a Rising Talent badge, while the more veteran freelancers can earn Top Rated and Top Rated Plus badges, meaning they can attract clients without applying for jobs.

Cons

• Freelancers pay up to 20 percent of their income on a contract to Upwork. After earning the first 500 USD with a client, Upwork’s fee is lowered to 10 percent and ends at five percent after 10,000 dollars is earned.
• Freelancers need “connects” to apply for jobs. While freelancers get some “connects” for free, they may have to pay for additional connects to apply for jobs.

Toptal

Toptal is known as the best platform for information technology (IT) professionals. The platform is especially relevant for gig workers in professions such as web development, web design, project management, and finance. The platform differs from its competitors by an aggressive screening process that only three percent of hopeful applicants pass. The screening involves comprehensive English language tests, communication evaluations, and assessment of personality traits. Applicants that pass the first round of tests are then asked to complete real-time problem-solving, creativity exercises, and test projects. In the end, the most talented and competitive freelancers are admitted to the platform and have great chances to work with leading global brands.

Pros

• Once a freelancer is accepted to the platform, companies will know that the freelancer is part of an exclusive crowd. Simply being accepted to the platform means being well-positioned to get a great rate.
• Toptal doesn’t charge freelancers any fees. Instead, clients pay a fee to access the competitive talent pool.
• Leading brands like Duolingo, Shopify, Hewlett Packard, and Udemy use Toptal to find talent.

Cons

• The rigorous testing process is an obvious con to the 97 percent that get disqualified in the process.
• Toptal’s selectiveness in terms of professions means that most freelancers have a better fit with another platform.
• While the essence of the gig economy is that freelancers are hired for smaller projects, Toptal only mediates big projects.

Fiverr

Fiverr is known to be among the best platforms for creatives and is popular among writers, graphic designers, and web designers. Fiverr stands out by being a visually-oriented platform, allowing freelancers to showcase their portfolio and skills and allowing clients to buy in on the talent with the necessary skill set to get the job done.

Pros

• Fiverr lets you showcase your skills and specific services, so the clients who need them can come to you.
• Fiverr has a range of courses that allows freelancers to educate themselves on client needs and how to succeed as a freelancer.

Cons

• Freelancers pay a 20 percent fee on all contracts to Fiverr. Besides that, it can take up to 14 days to access your funds.
• From a client´s perspective, the fact that so many freelancers provide similar services can make it difficult to find the top talent for a given task.